Blockchain Revolution

7. GOVERNING THE PROTOCOLS IS LIKE HERDING CATS
How should we steward this new resource to fulfill its potential? Unlike the Internet,
the bitcoin community does not yet have formal oversight bodies such as ICANN, the
Internet Engineering Task Force, or the World Wide Web Consortium to anticipate
development needs and guide their resolution—and the community prefers it that way.
That presents uncertainty. People who want to keep the blockchain decentralized,
open, and secure can’t agree on a way forward. If we don’t address governance, then
the movement could collapse on itself as it disintegrates into warring factions.
There are countless issues. Bitcoin core developers Gavin Andresen and Mike
Hearn have been advocating for an increase in block size from one megabyte of data
to as large as twenty megabytes. Bitcoin is not “a token for rich people to trade back
and forth. . . . It is a payment network,” said Andresen.
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They argue that if bitcoin is
ever to compete seriously as a global payment mechanism, then it has to prepare for
mainstream adoption. It couldn’t grind to a halt one day when transaction flow
suddenly surpassed blockchain capacity. Fees would skyrocket for people who didn’t
want to wait months or years for their transactions to settle. Or perhaps some central
power would step in, in the interest of consumer protection, and process the overflow.
In August 2015, they went ahead and launched Bitcoin XT, a fork of the blockchain
that allows for eight-megabyte blocks. It is still a controversial compromise.
Opponents argue that people shouldn’t be using bitcoin to buy their venti lattes at
Starbucks. “Some developers want every single person in the world to be running a
fully validating node that sees every single transaction and has absolutely no trust on
anybody else,” said Andresen. “The volunteer contributors who have been actually
making the software work for the last few years are worried that they personally may
not be able to handle larger blocks if transaction volume ramps up. . . . I don’t have a
whole lot of sympathy for that.”
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In other words, if the bitcoin blockchain is to scale
and remain secure, then we can’t have it both ways. Some nodes will run full
protocols and process more transactions into increasingly larger blocks, and others

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will run simplified payment verification models and trust that 51 percent of full nodes
get it right.
The biggest pushback against Bitcoin XT came from the mining pools in China.
Serious bitcoin miners, like hard-core online gamers, need not only seriously
powerful computers to find a correct hash but also seriously high-speed bandwidth to
broadcast it quickly across the network. China is an exception to Nielsen’s law of
Internet bandwidth: bandwidth doesn’t increase by 50 percent each year. If the block
size increase is too large, it would put low-bandwidth Chinese miners at a
disadvantage compared with miners in other parts of the world. Receiving new blocks
to build upon would take longer; and when they did find a new block, they would take
longer to send it out to the rest of the network. These delays would ultimately result in
the network’s rejecting some of their blocks. They would lose out to miners with more
bandwidth whose blocks propagated faster.
“Trying to bootstrap or change a network protocol is just a monumental task,”
said Austin Hill. “You just don’t want to be making changes ad hoc or very fast on an
ecosystem that’s managing anywhere from three to ten billion dollars’ worth of
people’s wealth and assets.”
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At the end of the day, said Andresen, “That governance
model is driven very much by what code the people actually want to run, what
standards people want to implement in the equipment they sell.” He said that bitcoin,
like the Internet, will “have a similar messy, chaotic governance process that will
eventually come down to what codes the people choose to run.”
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Again, we’re not talking about regulating but about stewarding this resource for
viability and success. Governance includes setting standards, advocating and adopting
sensible policies, developing knowledge about the technology’s potential, performing
watchdog functions, and actually building out the global infrastructure. We discuss a
multistakeholder governance model in the next chapter.